Dell's Dilemma in Brazil

Topics: Risk, Rio Grande do Sul, Investment Pages: 2 (663 words) Published: March 14, 2013
The Reasons Why Dell Should Simply Leave Brazil
The List of Facts 1. Political Risk (Political instability/Uncertanty)
2. Economical Risk (Economical instability)
3. Technological Risk (Entering new developing unstable market) 4. Cultural Risk (Difference in the culture of people with whom Dell is making business) 5. Social Risk
6. Competition Risk

1. Political Risk

Since its independence from Portugal in 1822, Brazil has never enjoyed any long term political or economic stability. When Dell was planning to enter the country, Brazil was divided into many states where each had their own policies and law. By entering Brazil, Dell has had to face political problems not just in regard to the whole country, but each state separately which also means any governance change. Unattractive benefits for being a member of Mercosul. The benefits of Mercosul is that any company that produced at least 60% of given product in any of Mercosul’s counties are able to export products to any of the other Mercosul counties at zero tariffs. That means while Dell was dealing with the complex financial and political structure of Brazil, any company coming from countries with less costs and less difficulties arising from operating environments can control the market and all Dell's efforts and investment would be pointless. In Brazil the relationships between politics and business were also very close. The state governance could simply make immediate deals with companies. In this situation no company would be secure in the market. For example, when Dutra won the election he took actions against TNCs by cancelling the tax incentives agreement granted to Dell and Ford. Also in the computer industry, the market wasn’t flexible and there was no certain regulations for this particular market. As we see in Brazil there is no guarantee of other political problems not arising any time as Brazil has a very...
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